ABSTRACT
Since 1971, Taiwan and China have fiercely competed for diplomatic recognition in Latin America and the Caribbean. Perceived economic benefits have been a primary concern for countries as they decide which side to choose. This chapter focuses on two research questions surrounding the economic impact of Taiwan–China diplomatic competition. First, have countries that switched ties indeed become better off? Second, given that the Belt and Road Initiative (BRI) has offered economic incentives to small states since its launch in 2013, do Taiwan-aligned countries that performed worse after that date tend to switch recognition to China to try to offset their losses? Using quantitative and qualitative methods, the findings demonstrate that changing relations from Taipei to Beijing does not necessarily lead to relatively better economic performance. Moreover, we find that Taiwan-aligned countries, even those with relatively worse economic performance starting in 2013, are not necessarily motivated to sever ties with Taiwan. The policy implications of this chapter suggest that the Taiwanese government should strengthen economic links with its diplomatic partners by encouraging the involvement of its state-owned companies and working with US government agencies.
